Policy

Modern Day Relevance of von Thünen

September 26, 2016 Who was he? As the name suggests, Johann Heinrich von Thünen was a German, who acquired a large agricultural estate, Tellow, in 1810. If you try to locate this on the map you will find it close to the town of Rostok, in Macklenburg, on the Baltic coast of erstwhile East Germany. He successfully managed his estate for forty long years, till he passed away in 1850. What did he do? During the forty years of his lifetime, he consulted a mass of minutely documented data on input and output, to understand the economics involved in running his farm. A keen observer and an extremely intelligent man, he found a pattern in his observation. In fact, David Ricardo- a British political economist, and von Thünen, living miles apart, came to almost similar conclusions regarding economic rent, unknown to each other. Ricardo perceived the fertility of the land to be the key factor in determining rent, while von Thünen believed that distance from the market would determine rent. Thus his classical model of agricultural location drew largely from his experience of economic analysis of his farm accounts and even the constraints listed by him were based on these accounts. How did he do it? Any agricultural location model, as the name suggests, provides a framework for identifying important variables that determine the spatial pattern...

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